Google achieves 17% revenue growth in Q1, the slowest in three years

Alphabet’s Google announced that its quarterly revenue rose 17 percent from a year ago to $36.3 billion during the first quarter of 2019.
Google India businessThe growth was the slowest since 17 percent in the first quarter of 2016 and compared with 26 percent for the same quarter in 2018.

Facebook, the No. 2 internet ad company, has posted 26 percent growth to $15.1 billion in quarterly results last week, Reuters reported.

Alphabet Chief Financial Officer Ruth Porat attributed slower revenue growth to currency fluctuations, competition and unspecified product changes.

The company is facing continued pressure from advertisers to tighten controls on its fast-growing YouTube video service so that they not appear to be sponsoring adult or offensive content.

Google also is struggling to find the right mix of ad formats to use on mobile devices, voice assistant-enabled home speakers and in emerging markets.

About 85 percent of Alphabet’s revenue comes from Google’s ad business, which sells links, banners and commercials across its own websites and apps and those of partners.

Google CEO Sundar Pichai said revenue slowdowns should be expected as the company focuses on the long term.

“You are going to have quarter-to-quarter variations once in a while, but we remain confident about the opportunities we see,” he said on a conference call.

Major competitors for ad spending such as Facebook, Snap, Amazon.com and Twitter posted last week quarterly revenue above or in line with analysts’ expectations.

“Google ad revenue growth has been slowing amid downward pressure on ad prices, especially for revenues coming from international markets,” Monica Peart, senior forecasting director for ad research firm eMarketer said in a statement.

Alphabet’s quarterly costs rose about the same as revenue, up 16.5 percent from last year to $29.7 billion.

Expenses have surged faster than revenue for much of the past two years as it adds data centers, offices and YouTube content licenses.

More advertising controls are coming to YouTube in the coming weeks that could affect sales, Pichai said.

In the first quarter, sales of Google’s Pixel phones also struggled from intense competition in the premium smartphone market, Porat said. The company is expected to introduce lower-priced Pixel devices next month.

Alphabet has yet to tout significant revenue from its spending on ventures such as self-driving cars and its AI helper Google Assistant.

Newer units that are producing noticeable revenue have lagged in market share, including Google’s consolidated hardware unit and Google Cloud, which sells computing and data storage services to businesses.

Google’s costs could jump further if governments globally follow through on threats to rein in the ability of apps to track users for advertising purposes. Other regulators have discussed forcing companies to step up monitoring of user content. Cost will rise in the current quarter as Google resumes some marketing efforts, Porat said.

Alphabet’s expenses included a $1.7 billion fine from the European Commission for having placed anticompetitive advertising restrictions on websites using its searches.

Google’s 3 billion users help make it the world’s largest seller of internet ads, capturing nearly a third of all revenue, according to research firm eMarketer. Facebook is at about 20 percent.

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